Ooooby: Pete Russell – the champion for local food
Can you tell us a little bit about your background and the origin of Ooooby?
Pete: I've been entrepreneurial my whole career, and in the first 15 years of my working life, I think I started around 15 different enterprises. In 2003 or thereabouts I got into the food game. And that's where I really felt that it's a great industry and one where I felt I had a real passion. I started out running a wholesale, independent patisserie business in Sydney, Australia. We had a team of around 20 pastry chefs and we were supplying hundreds of cafes around Sydney, with fresh baked daily croissants and danish and cafe products that we made from scratch in our own kitchen. At a certain point, I was hungry for growth but we had a financial constraint as we had to build or rent a larger premise and we just didn't have the volume of sales to be able to justify that. So, we looked at other ways we could grow and partnered up with a massive producer of croissants and danish and pastries in Europe and imported that into Australia. I went from being a local independent business to representing a massive centralized corporate entity and selling through all the supermarkets in Australia.
On one hand, it was fantastic because it was much more lucrative – we could sell much more volume. We went from doing $1 million dollars a year to over $20 million a year in sales. On the other hand, it was soulless and we weren't selling food anymore, we were selling widgets, and we were dealing with people who did not care about anything other than the numbers. I was finding myself feeling hollowed out and realised that it just wasn't for me.
What happened next, was that the Global Financial Crisis in 2008 completely capsized our business. And at that point, I thought to myself, I want to be part of the food system that is built for the future, that really honors the people who are producing our food. I firmly believe that with the right technology, local independent businesses will be able to reclaim market share, which is how I started Ooooby.
Could you talk about how Ooooby contributes to both environmental and/or social impact?
Pete: Ooooby is a tech platform that connects small-scale food growers with consumers. Firstly, in terms of food waste, we have reduced a massive amount of food waste, based effectively on shortening the time from harvest to order. This ensures that the hubs receive the sales first before the farmers harvest the food, so that the demand is secured and the farmers only harvest what's actually been ordered. This creates a pull to market model rather than the conventional push to market model, where you put it on the shelves, and you wait for it to be sold, in which case often up to 20-30% of the food is wasted on average.
The other one is nutritional value and freshness. The same order-harvest model allows the hubs to deliver food the same day or the next day from harvest. So, the freshness is completely off the charts relative to going through a normal supply chain, and therefore the quality of the food is higher and the nutritional value of the food is better.
The other one is packaging. If you think about the purpose of packaging, there are two main reasons. One is to preserve the food as it goes through a supply chain from the point of harvest to the point of consumption, and the other one is for the sake of merchandising on shelves. In the Ooooby model, there is no requirement for either of those, because it's very quick from harvest to doorstep and all the merchandising is done online. So, there's no packaging required and we eliminate plastic from being needed to be used at all. Furthermore, the packaging that is used is often reusable. Drivers collect last week's boxes when they deliver this week's box and then it goes round and they'll often go around 8 to 10 times before they are ready to be composted.
We are also helping to boost rural economies because the farmers will become a vertically integrated farm; their own distributor. And they're getting the full retail price of the food, which means that they have a greater sales margin and employ their farm workers to do more work throughout the supply chain. Thus, there are more employment opportunities because the farmers are carrying out more parts of the value chain and therefore more of the employment is being maintained within rural areas. Our model has multiple impacts, but most importantly it provides farmers and food producers far more independence and autonomy than being at the mercy of large-scale buyers forcing prices down.
Ooooby is planning to implement quite a unique ownership model. Could you tell us more about that?
Pete: We are in the mid stages of developing a user ownership model. Basically, as a hub engages on the Ooooby platform they will be earning tokens based on three things: 1) The length of time that they're active on the platform; 2) the volume of sales that they conduct on the platform, and 3) the number of referrals that they successfully bring to the platform. These tokens entitle them to a portion of the benefits of a shared pool of the company. Over time, as they trade on the platform, they'll be adding value to the platform by adding volume of sales, but they will also be able to share the benefits that they are generating.
This allows an alignment and increased ownership of the hubs and farmers to the network, which makes them not just a user, but a member and an owner. They will have a share in the dividends and will also be able to have a voice in influencing the direction, the principles and the guidelines through which the platform grows.
What was the genesis of this user ownership model?
Pete: I think it was mainly around the principle of independence. From my experience of working in the large-scale centralized food system, the controls come from that central entity. Suppliers are very dependent on the decisions and the whims of those central entities. We wanted to avoid the scenario of Ooooby being owned by a large centralized entity that would exploit farmers in the way that they're being exploited now. This led to the idea of a decentralized ownership model to make sure that the owners of this platform are the users of the platform. This also incentivizes the stickiness to the platform, which incentivizes the volume and brings the attractiveness of the platform. We've made a promise that Ooooby will never be sold to another entity. You can invest in it, but you'll never own a majority or a controlling stake in the company.
Why did Mana Impact support the investment in Ooooby?
We were impressed by the team’s commitment in supporting organic and sustainable farmers, as well as their ability to design a farmer centric product given their extensive experience in the food sector. We were also intrigued by the ambition they have with regards to setting up a new company ownership model.
This interview has been edited and condensed.